Before Elizabeth Warren won her seat to represent Massachusetts in the Senate, she taught law at Harvard, where she became the most often cited expert in the field of commercial law. Thus, following the 2008 financial crisis, she was highly qualified to chair the Congressional Oversight Panel created to oversee the TARP relief program. Later she was appointed a special assistant to President Obama's Secretary of Treasury. In that capacity, she designed and fought to establish the Consumer Finance Protection Bureau, a watchdog group to advocate for consumer interest vis a vis banks and credit card companies. Political forces prevented her being chosen to run the Bureau, so she went home and got elected to return to Washington as a senator. And here she is.
This past week, Elizabeth Warren got to grill the Wells Fargo CEO John Stumpf in a senate committee hearing on the fraud his bank has been perpetuating so shamelessly. In a nutshell, lower level bank employees (tellers, personal bankers) were under extreme pressure from management to increase the numbers of new accounts by cross-selling. This means taking customers with checking accounts and getting them to open savings accounts, lines of credit, credit cards, etc. -- up to eight accounts -- and the employees were given quotas to meet or be fired.
In an attempt to fill those quotas, it became common practice by employees to secretly open new accounts, or issue new credit cards, in their customers' names without their knowledge. More than 2 million of these fraudulent accounts were opened, thus artificially increasing the bank's number of accounts, which is one measure on which banks are rated and valued.
The problem is that it involved charging fees to their customers' accounts without their permission and may have affected people's credit ratings. On the face of it, this is banking fraud, in addition to other criminal activity such as signature forgery and identity theft by bank employees. Now Wells Fargo has gotten caught, and the CEO was called in to explain to the Senate Banking Committee. For the record, CEO Stumpf says that he did not know this was going on, although he oversaw the policy of aggressive pressure on employees for new accounts.
This is exactly the kind of bank activity -- multiplied to fraud status -- that led to the creation of the Consumer Finance Protection Bureau. So you can image that Sen. Warren was not gentle with Mr. Stumpf in the hearing. In fact, there was almost universal dismay and condemnation from both Democrats and Republicans on the committee. After getting Stumpf to admit that no senior executives had been held accountable, although thousands of lower level employees have been fired, Sen. Warren said to him:
“This just isn’t right. You squeezed employees to the breaking point. . . . You went on television to blame thousands of $12-an-hour' workers. . . . You should resign. You should give back the money you took while this scam was going on and you should be criminally investigated. . . . The only way Wall Street will change will be if executives face jail time."
The wonderful thing about Senator Warren's passionate, articulate attacks is that you know she is 100% sincere, that she enjoys the process of standing up to bad guys at the top, and that no amount of money could ever buy her off. Glad we're on the same side.